Handling the Post-Covid Debt: Keep Calm and Carry On

Post covid debt image 3


• Post-COVID government debt is not a major or insoluble issue for
a UK government that has sovereign control of its own currency

• Taxes should be seen as an inflation-taming tool not primarily as
the route to cutting government debt or funding government

• There is no imperative to start considering tax rises now or in the
near future. Incipient inflation not government debt levels should
be the trigger for considering tax rises

• Fiscal policy may be a better route to dealing with any excess
inflationary pressure, should it materialize, than are higher
interest rates

• Taking this perspective also has political advantages for the
government in a post-Brexit, post-COVID world and relative to
the issues that will likely plague the Eurozone

• Political objections that may be ideologically driven.


  1. Stephen Gwynne says

    A MMT perspective that ignores the bond market and growing yields is a perspective that seeks to ruin the country’s finances as increasing bond yields increase interest rates and therefore the cost of borrowing.

    MMT is a framework that specifically removes the intermediacy of the bond market, not one that ignores it.

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